The wealth held abroad in offshore financial jurisdictions has grown by 6.1 percent in the last year despite efforts by governments to curb tax evasion. The figures have soared to a total of $8.5 trillion, according to Boston Consulting Group.
Offshore assets, those booked out of the investor’s home country,
have grown by billions of dollars in 2012, Financial Times
reports. Switzerland is crowning the list of jurisdictions where
the funds are being kept, the new research from BCG revealed.
Investors appear to prefer the risks related to keeping funds in
tax havens against the guaranteed tithe on their fortunes by the
tax authorities at home. A number of information exchange
agreements have been forced on offshore jurisdictions by
governments like the US, the EU and the UK, since the leading
economies are striving to cope with budget deficits at home and
demand more transparency.
According to experts cited by the Financial Times, there seems to
be more for the investors in the offshore centres than an easy
way to save as much money as possible.The strong performance of
the offshore centres amid a growing crackdown on evasion is seen
by some experts as evidence that investors are using offshore
centres for reasons other than hiding money.
According to the BCG study, the major inflow of money to the
offshore centers over the next five years is likely to come from
the rich in emerging economies. These investors chose banks in
Switzerland or Liechtenstein for stability and security reasons,
rather than for tax evasion.
“The raft of tax information disclosure deals signed by
traditional European banking centres have not had a significant
impact on the amount of money and assets held there which
supports the idea that only a small fraction of overseas money
held in those jurisdictions is for tax avoidance or evasion,”
the head of tax, at Pinsent Masons law firm Jason Collins told
the Financial Times.
He named insecurity of domestic banks among the reasons why
investors transfer their money to jurisdictions like
Switzerland. “While it is true that some individuals
will use banking centres like Switzerland or Liechtenstein to
avoid or evade taxes, many are using these banking centres for
the security they provide their assets.”
Both Luxembourg and Switzerland marked a significant decline in
wealth floating from Western European countries and North
America.
Meanwhile UK based charity Oxfam, has recently released a report
saying that individuals are holding some $18.47 trillion in tax
havens around the world. According to the organization’s
estimates, tax lost in tax havens is enough to end global poverty
twice over.